From next year, Croatia will levy a property tax of between 0.6 and 8 euros per square metre, Finance Minister Marko Primorac announced on Monday.

The tax will primarily apply to residential buildings, while properties used for agriculture and non-residential purposes will be exempt from the tax, he added.

The tax will be due from the first day of actual use of the property in question. In order to be exempt from the tax, the owner must have a long-term lease of at least ten months per year with the user.

Properties that are not used for residential purposes are not subject to the tax.

Local authorities to determine their tax zones

The amount of the tax will be between €0.6 and €8 per square metre, and local authorities will determine their areas for taxation.

The local authorities must decide on the amount of the tax by 28 February next year for the year 2025 and for each subsequent year by 15 December of the previous year.

The tax will be determined on the basis of the situation on 31 March.

“If the property is vacant or rented out for a short period of time at that time, the tax will be levied,” Primorac said, adding that the tax administration will review long-term rental contracts.

Taxes for short-term tourist rentals will depend on the development index

Local authorities receive 80% of the revenue from the property tax, while the central government receives 20%.

Legal entities such as banks and companies are also subject to this tax, while public buildings and those owned by the state are exempt.

Properties in which people live permanently or which are rented out on a long-term basis are not taxed.

For short-term tourist rentals, the tax is determined based on the Tourism Development Index and ranges between €150 and €300 per bed for the most developed tourist areas, between €100 and €200 for category 2 areas, between €30 and €150 for category 3 areas and between €20 and €100 per bed for the least developed tourist areas.

Raising the threshold for entry into the VAT system from €40,000 to €50,000; changes to PIT rates

Primorac also announced that the threshold for entering the VAT system would be raised from €40,000 to €50,000, which would reduce the number of VAT payers by 7,500.

As for income tax, Primorac announced an increase in non-taxable income for dependants and people with disabilities from €560 to €600.

The maximum amounts of the lower and higher rates of personal income tax (PIT) will also be reduced. From 1 January 2025, municipalities will be allowed to set the lower rate between 15% and 20% and the upper rate between 25% and 30%. For cities, the lower rate will be between 15% and 21% and the higher rate between 25% and 31%, and for towns and districts, the lower rate will be between 15% and 22% and the higher rate between 25% and 32%.

For the city of Zagreb, the lower income tax rate will be between 15% and 23% and the higher rate between 25% and 33%